Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao

Since 1977
RFBT.3601 VILLEGAS/APRADO/MAGUMUN/CELIZ
Obligations (RA 386) May 2024

LECTURE NOTES
Obligation b. Bilateral – both parties are bound

An obligation is a juridical necessity to give, to do, or not to 5. Existence of burden or condition

do. (Art. 1156) a. Pure – not burdened with any condition or
term (Art 1179)
Elements of an Obligation b. Conditional – subject to a condition which
1. Juridical Tie or vinculum juris or efficient cause – may be suspensive or resolutory (Art 1181)
the efficient cause by virtue of which the debtor
becomes bound to perform the prestation. 6. Character of responsibility or liability
2. Active subject [creditor or obligee] – the person a. Joint – each debtor is liable only for a part
demanding the performance of the obligation. of the whole liability and to each creditor
3. Passive subject [debtor or obligor] – the person shall belong a part of the correlative rights
bound to perform the prestation to give, to do, or (Art. 1207)
not to do. - Presumed by law (Art. 1208)
4. Object or prestation – the subject matter of the b. Solidary – each of the debtor is obliged to
obligation which has a corresponding economic pay the entire obligation, and each one of
value or susceptible of pecuniary substitution in the creditors has the right to demand from
case of non-compliance. any of the debtors the payment or
fulfillment of the entire obligation
In order to be valid, the object or prestation must
- Not presumed. Must be expressly
be:
stipulated by the parties, or when the law
a. Licit or lawful;
or the nature of the obligation requires
b. Possible, physically and legally;
solidarity (Art. 1207)
c. Determinate or determinable; and
d. Pecuniary value or possible equivalent
7. Susceptibility of partial fulfillment
in money.
a. Divisible – obligation is capable of partial
performance (Art. 1223; 1224)
Different Kinds of Prestation
b. Indivisible – obligation is not susceptible of
1. Obligation to Give – delivery of a thing to the
partial performance because otherwise the
creditor
obligation will be changed
i.e. sale, deposit, pledge, donation,
antichresis
2. Obligation to Do – rendering of works or services, 8. Right to choose and substitution
whether physical or mental a. Alternative - obligor may choose to
i.e. contract for professional services like completely perform one out of the several
painting, modeling, singing, etc. prestations (Art. 1199)
3. Obligation Not to Do – refraining from doing certain b. Facultative – only one prestation has been
acts agreed upon, but the obligor may render
i.e. negative easement, restraining order, one in substitution of the first one (Art.
or injunction 1206)
c. Conjunctive – obligor has to perform all of
Classification of Obligations the several prestations to extinguish the
obligation.
1. Creation
a. Legal – imposed by law (Art. 1158) 9. Imposition of penalty
b. Conventional – by agreement of parties a. Simple – there is no penalty imposed for
(e.g. contracts) violation of the terms (Art 1226)
b. Obligations with a penal clause – obligation
2. Object which imposes a penalty for violation of the
a. Determinate/ specific – particularly terms (Art. 1226)
designated or physically segregated from all
others of the same class; 10. Sanction
b. Indeterminate/ generic – designated a. Civil – gives a right of action to compel their
merely by its class or genus; performance;
c. Delimited generic – generic objects confined b. Natural – not based on positive law, but on
to a particular class equity and natural law; does not grant a
d. right of action to enforce their performance,
3. Performance but after voluntary fulfillment by the
a. Positive – to give; to do obligor, they authorize retention of what
b. Negative – not to do has been delivered or rendered by reason
thereof;
4. Person obliged
a. Unilateral – only one party is bound

Page 1 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

c. Moral – cannot be enforced by action but The creditor has a right to the fruits of the thing from the
are binding on the party who makes it in time the obligation to deliver it arises. However, he shall
conscience and natural law. require no real right over it until the same has been
delivered to him. (Art 1164)
Sources of Obligations
1. Law – the law itself establishes the obligation Forms of breach of obligations
1. Voluntary – debtor is liable for damages if he is
2. Contracts – governed primarily by stipulations, guilty of:
clauses, terms, and conditions of the parties’ a. Default (mora)
agreement b. Fraud (dolo)
c. Negligence (culpa)
3. Quasi-Contracts – arises from lawful, voluntary and d. Breach through contravention of the
unilateral acts based on the principle that no one tenor thereof
shall be unjustly enriched or benefited at the 2. Involuntary – debtor is unable to perform the
expense of another. obligation due to fortuitous event, thus not liable for
damages.
a. Negotiorium gestio (inofficious manager) –
arises when a person voluntarily takes Kinds of Legal Delay or Default
charge of the management of the business
or property of another without any power 1. Mora solvendi – default on the part of the debtor/
from the latter (Art. 2144) obligor (ex re and ex persona)

b. Solutio indebiti – takes place when a person General Rule: No demand = no default (Art. 1169 par 2)
received something from another, without Exceptions: Demand by the creditor shall not be necessary
in order that delay may exist when:
any right to demand for it, and the thing
was unduly delivered to him through
a. The obligation or the law expressly so declares;
mistake (Art. 2154)
or
b. From the nature of the circumstances of the
4. Delict – an act or omission punishable by law
obligation it appears that, the designation of
-
time when the thing is to be delivered or the
5. Quasi-Delict or tort– an act or omission arising from
service is to be rendered, was a controlling
fault or negligence which causes damage to
motive for the establishment of the contract;
another, there being no pre-existing contractual
c. Demand would be useless, as when the obligor
relations between the parties.
has rendered it beyond his power to perform
Nature and Effects of Obligations (Art. 1169 par 2)

Obligations of a debtor in an obligation to deliver Effects of mora solvendi

1. Specific a. Debtor may be liable for damages (Art. 1155)
a. Deliver the thing agreed upon (Art. 1165) or interests;
b. Must deliver all accession, accessories, and fruits b. When the obligation has for its object a
of the thing even though they may not have been determinate thing, the debtor may bear the risk
mentioned (Art. 1166) of loss of the thing even if the loss is due to
c. Fortuitous event extinguishes the obligation fortuitous event
d. Remedies of creditor in case of failure to deliver: c. Rescission or resolution
i. specific performance
ii. rescission (Art. 1380) 2. Mora accipiendi – default on the part of the
iii. resolution (Art. 1191) creditor/obligee.
3. Compensatio morae – default on the part of both
2. Generic the debtor and creditor in reciprocal obligations.
a. Deliver the thing which is neither of superior nor
inferior quality, if quality and circumstances have Kinds of Fraud
not been stated by the parties (Art. 1246) 1. Dolo causante – this is the essential cause of the
b. Delivery of another thing within the same genus consent, without which the party would not have
as the thing promised, if such thing is damaged due agreed to enter into the contract (Art. 1338); it
to lack of care or a general breach is committed. renders the contract voidable.
c. Fortuitous event does not extinguish the 2. Dolo incidente – this is the kind of fraud that is not
obligation (genus never perishes).
the efficient cause for the giving of consent to the
d. Remedies of creditor in case of failure to deliver:
contract, refers merely to an incident therein, and
i. specific performance
ii. ask that the obligation be complied with which even if not present, the contracting party
at the debtor’s expense with a right to would have still agreed to the contract; it does not
recover damages affect the validity of the contract.
iii. resolution or specific performance, with
damages in either case

Right of the creditor to fruits

Page 2 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

Fraud v. Negligence
In fraud, there is deliberate intention to cause damage, Rescission (Resolution) (Art. 1191)
which in negligence, there is no deliberate intention to cause It is the cancellation of the contract or reciprocal obligation
damage even if the act was done voluntarily. in case of breach on the part of one, which breach is
Kinds of Negligence violative of the reciprocity between the parties. This is
1. Culpa contractual – negligence which results from properly called resolution.
the breach of contract;
2. Culpa aquiliana (civil negligence or tort or quasi- The rescission under Art. 1380 is rescission based on lesion
delict) – acts or omissions that cause damage to or fraud upon creditors.
another, there being no contractual relation
between the parties (Art. 2176) General rule: The injured party can only choose either
fulfillment or rescission of the obligation, and not both.
3. Culpa criminal (criminal negligence) – those which
results in the commission of a crime or a delict.
Exception: If fulfillment has become impossible, Art. 1191
allows the injured party to seek rescission even after he has
Contravention of Tenor of Obligation chosen fulfillment.
The act of contravening the tenor or terms or conditions of
the contract is also known as “violatio”, i.e. failure of Damages
common carrier to safely take its passenger to their Those liable under Art. 1170 shall pay damages only if
destination. aside from the breach of contract, prejudice or damage
was caused.
However, violation of the terms of contract is EXCUSED in
proper cases by fortuitous events (Art. 1170). Kinds of Civil Obligations

Fortuitous Event/ Caso Fortuito Pure obligation

An occurrence or happening which could not be foreseen, or An obligation whose performance does not depend upon a
even if foreseen, is inevitable. future or uncertain event, or upon a past event unknown to
the parties, demandable at once (Art. 1179)
Requisites:
1. Cause of breach is independent of the will of the Conditional obligation
debtor; An obligation subject to a condition and the effectivity of
2. The event is unforeseen or unavoidable; which is subordinated to the fulfillment or non-fulfillment of
3. Occurrence renders it absolutely impossible for the a future and uncertain event or a past event unknown to
debtor to fulfill his obligation in a normal manner; the parties.
4. Debtor is free from any participation in the
aggravation of the injury to the creditor. Condition – is an event that is future and uncertain, upon
which the efficacy or extinguishment of an obligation
Liability for Loss due to Fortuitous Event depends.

General Rule: No liability Note: The condition shall be deemed fulfilled when the
Exceptions: obligor voluntarily prevents its fulfillment (Art. 1186)
1. Law;
2. Nature of the obligation requires assumption of risk; Period v. Condition
3. Stipulation; Basis Period Condition
4. Debtor is guilty of dolo, malice, or bad faith, has As to time Refers to the May refer to past
future. event unknown to
promised the same thing to two or more persons
the parties.
who does not have the same interest (Art. 1165)
As to It will happen at an May or may not
5. The debtor contributed to the loss; fulfillment exact date or at an happen.
6. The possessor is in bad faith; indefinite time but
7. The obligor is guilty of fraud, negligence or delay, is definite to
or if he contravened the tenor of the obligation. arrive.
Characteristic Futurity and Futurity and
REMEDIES IN CASE OF BREACH OF OBLIGATION certainty uncertainty
Effect of its No effect on its May give rise to an
Specific Performance happening to existence, only in obligation
1. Exhaustion of the properties of the debtor; the its demandability (suspensive) or
2. Accion subrogatoria (subrogatory action) – an obligation the cessation of
indirect action brought in the name of the debtor by one already
the creditor to enforce the former’s rights except: existing
a. Personal rights of the debtor; (resolutory)
b. Rights inherent in the person of the debtor; If fulfillment Valid. But the court Annulled.
c. Properties exempt from execution. is dependent is empowered to
3. Accion Pauliana (rescissory action) – an action to on sole will fix the duration of
of debtor the period.
impugn or assail the acts done or contracts entered
Retroactivity None. The moment the
into by the debtor in fraud of his creditor.
condition is
fulfilled, the
Substitute Performance
effects will
It is a remedy of the creditor in case of non-performance by
retroact on the
the debtor where another party performs the obligation or
day of the
the same is performed at the expense of the debtor.

Page 3 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

constitution of the Form of payment

obligation. 1. Payment in cash – all monetary obligations shall be
settled in Philippine currency. However, parties may
agree that the obligation be settled in another
Suspensive condition v. Resolutory condition currency at the time of payment.
Basis Suspensive Resolutory
Condition Condition 2. Payment in check or other negotiable instrument –
Effect of Obligation arises Obligation is not considered payment, they are not considered
fulfillment or becomes extinguished. legal tender and may be refused by the creditor,
effective. except when the document has been encashed or it
Effect of No juridical Juridical relation
has been impaired through the fault of the creditor
non- relation is is consolidated.
(Art. 1249)
fulfillment created.
When rights Rights are not yet Rights are already
are acquired acquired, but vested, but
there is hope or subject to the
expectancy that threat or danger
they will soon be of extinction.
acquired.

Obligations with a Period or Term

Obligations for whose fulfillment a day certain has been
fixed, shall be demandable only when that day comes (Art.
1193)

Requisites of a valid period or term

1. Future;
2. Certain; and
3. Possible, legally and physically.

Benefit of the period

General Rule: Whenever in an obligation a period is
designated, it is presumed to have been established for the
benefit of both the creditor and the debtor.

Exception: When it appears from the tenor of the period or

other circumstances that it was established for the benefit
of one of the parties. (Art. 1196)
General Rule: The creditor is not bound to accept payment
Extinguishment of Obligations or performance by a third person.
I. Payment or performance;
II. Loss of the thing due; Exceptions:
III. Condonation or remission of debt; 1. When made by a third person who has interest in
IV. Confusion or merger; the fulfillment of the obligation;
V. Compensation; 2. Contrary stipulation (Art. 1236)
VI. Novation;
VII. Annulment; Note: Payment made by a third person who does not intend
VIII. Rescission; to be reimbursed by the debtor is deemed to be a donation,
IX. Fulfillment of a resolutory condition; which requires the debtor’s consent. But the payment is in
X. Prescription. any case valid as to the creditor who has accepted it (Art.
1238)
The enumeration is not exclusive.
Special Forms of Payment
I. Payment or Performance 1. Dacion in Payment (Dacion en pago) – alienation by
Payment may consist not only in the delivery of money but the debtor of a particular property in favor of his
also the giving of a thing (other than money), the doing of creditor, with the latter’s consent, for the
an act, or not doing of an act (Art. 1232) satisfaction of the former’s money obligation to the
latter, with the effect of extinguishing the said
Requisites of valid payment money obligation.
1. The person who pays the debt must be the debtor;
2. The person to whom payment is made must be the 2. Application of Payment – designation of the
creditor; particular debt being paid by the debtor who has
3. The thing to be paid or to be delivered must be the two or more debts or obligations of the same kind
precise thing or the thing required to be delivered in favor of the same creditor to whom payment is
by the creditor; made.
4. The manner (if expressly agreed upon), time, and
place of payment, etc. and 3. Payment by cession – debtor cedes his property to
5. Acceptance by the creditor. his creditors so the latter may sell the same and the
proceeds realized applied to the debs of the debtor.

Page 4 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

1. Must be gratuitous;
4. Tender of payment – Voluntary act of the debtor 2. Acceptance by the debtor;
whereby he offers to the creditor for acceptance the 3. Must not be inofficious;
immediate performance of the former’s obligation 4. Formalities provided by law on donations must be
to the latter. complied with if condonation is express (Art. 1270);
and
5. Consignation – act of depositing the object of the 5. An existing demandable debt at the time the
obligation with the court or competent authority remission is made.
after the creditor has unjustifiably refused to accept
the same or is not in a position to accept it due to The renunciation of the principal debt shall extinguish the
certain reasons or circumstances. accessory, but the waiver of the latter shall leave the former
in force. (Art 1273)

II. Loss of the Thing Due IV. Confusion or merger of rights

When a thing is considered lost There is confusion when there is meeting in one person of
1. It disappears in such a way that its existence is the qualities of a creditor and debtor of the same obligation.
unknown;
2. It goes out of commerce; Requisites:
3. It perishes; 1. It must take place between the creditor and the
4. Its existence is unknown or if known, it cannot be principal debtor (Art. 1276)
recovered. 2. The very same obligation must be involved;
3. The confusion must be total or as regards with the
Determinate obligation to give entire obligation.

General Rule: The obligation is extinguished when the Note: Confusion which takes place in the person of any of
object of the obligation is lost or destroyed (Art 1262) the guarantors does not extinguish the obligation (Art.
1276)
Exceptions:
1. Law provides otherwise (Art 1262); V. Compensation
2. Nature of the obligation requires the assumption of It is a mode of extinguishing obligations that take place
risk; when two persons, in their own right, are creditors and
3. Stipulation to the contrary; debtors of each other (Art. 1278)
4. Debtor contributed to the loss;
Requisites:
5. Loss of the thing occurs after the debtor incurred in
1. Each one of the obligors must be bound principally,
delay;
and that he be at the same time a principal creditor
6. When debtor promised to deliver the same thing to
of the other except guarantor who may set up
two or more persons who do not have the same
compensation as regards what the creditor may owe
interest (Art 1165);
the principal;
7. When the debt of a certain and determinate thing
2. Both debts consist in sum of money, or if the things
proceeds from a criminal offense (Art. 1268); and
due are consumable, they be of the same kind and
8. When the obligation is generic
also of the same quality if the latter has been
stated;
Generic obligation to give
3. Both debts are due;
General rule: The obligation is not extinguished because a 4. Both debts are liquidated and demandable;
thing never perishes (Art. 1263) 5. Neither debt must be retained in a controversy
commenced by third person and communicated in
Exceptions: due time to the debtor (Art. 1279); and
1. In case of generic obligations whose object is a 6. Compensation must not be prohibited by law (Art.
particular class or group with specific or 1290).
determinate qualities;
2. In case the generic thing has already been Kinds of Compensation
segregated or set aside, in which case it has become 1. Legal Compensation – by operation of law;
specific. 2. Conventional – by agreement of the parties;
3. Judicial (set-off) – by judgment of the court when
Obligation to do there is counterclaim duly pleaded, and the
The obligation is extinguished when the prestation becomes compensation decreed; and
legally or physically impossible without the fault of the 4. Facultative – may be claimed or opposed by one of
obligor (Art. 1266). the parties

VI. Novation
III. Condonation or remission of debt It is the substitution or change of an obligation by another,
It is an act of liberality by virtue of which the creditor, resulting in its extinguishment or modification, either by
without receiving any price or equivalent, renounces the changing the object or principal conditions, or by
enforcement of the obligation, as a result of which, it is substituting another on the place of the debtor or by
extinguished in its entirety or in that part or aspect of the subrogating a third person to the rights of the creditor.
same to which the condonation or remission refers.
Requisites:
Requisites of condonation: 1. Valid old obligation

Page 5 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

2. Intent to extinguish or modify the old obligation; b. Voidable – Novation can take place, except
3. Capacity and consent of all parties to the new when such new obligation is annulled. In
obligation; such case, old obligation shall subsist.
4. Substantial difference of the old and new obligation c. Pure obligation – conditions of old obligation
– on every point incompatible with each other; and deemed attached to the new, unless
5. Valid new obligation. otherwise stipulated
d. Conditional obligation
Delegacion – the substitution is initiated by the old debtor i. If resolutory – valid until the
himself by convincing another person to take his place and happening of the condition
to pay his obligation to the creditor ii. If suspensive and did not
materialize – no novation, old
Expromission – The substitution of the old debtor by a new obligation is enforced (Art. 1181)
debtor is upon the initiative or proposal of a third person.
Subrogation
The consent of the creditor is mandatory both in delegacion
It is the active subjective novation characterized by the
and expromission (Art. 1293).
transfer to a third person of all rights appertaining to the
creditor in the transaction concerned including the right to
Effects of novation
proceed against the guarantors or possessors of mortgages
1. Extinguishment of principal also extinguishes the
and similar others subject to any applicable legal provision
accessory except: or any stipulation agreed upon by the parties in
a. Mortgagor, pledger, surety or guarantor conventional subrogation.
agrees to be bound by the new obligation;
b. Stipulation made in favor of a third person Kinds of Subrogation
such as stipulation pour atrui (Art. 1311) 1. Legal subrogation – constituted by virtue of a law
unless beneficiary consents to the novation and not from agreement of parties;
(Art. 1296) 2. Voluntary or conventional subrogation – by
voluntary agreement of the parties;
2. If old obligation is: 3. Conventional subrogation of a third person requires
a. Void – novation is void (Art. 1298) the consent of the original parties and of the third
b. Voidable – novation is valid provided the person.
annulment may be claimed only by the
debtor or when ratification validates acts Presumption of Legal Subrogation
(Art. 1298) General Rule: Legal subrogation is not presumed (Art.
c. If the old obligation was subject to a 1300)
suspensive or resolutory condition, the new Exception: In cases expressly mentioned in the law:
obligation shall be under the same 1. When a creditor pays another creditor who is
condition, unless it is otherwise stipulated. preferred, even without the debtor’s knowledge;
(Art. 1299) 2. When a third person, not interested in the
obligation, pays with the express or tacit approval
3. If the new obligation is: of the debtor;
a. Void – original one shall subsist, unless the 3. When, even without the knowledge of the debtor, a
parties intended that the former relation person interested in the fulfillment of the obligation
should be extinguished in any event (Art. pays without prejudice to the effects of confusion as
1297) to the latter’s share. (Art. 1302)

OBLIGATION MC QUESTIONS

I. GENERAL PROVISIONS/NATURE AND EFFECTS d. Super negligence

OF OBLIGATIONS
4. Statement No. 1: A obliged himself to give B a specific
1. Which is not a source of obligation? car tomorrow. If A failed to deliver tomorrow after
a. Law demand is made. B may compel A to do his obligation
b. Culpa Aquiliana and may ask for damages.
c. Culpa Contractual Statement No. 2: A obliged himself to deliver a car to A
d. Quasi Contract tomorrow. If A failed to deliver tomorrow after demand
is made. B's right is to ask a third person to deliver a
2. A source of obligation where negligence resulted to car to him at the expense of A plus damage.
crime: a. Both are true
a. culpa contractual b. Both are false
b. quasi-contract c. No. 1 is true; No. 2 is false
c. culpa delictual d. No. 1 is false; No 2 is true
d. culpa aquiliana
5. Which of the following is considered as quasi-contract?
3. Under the Roman Law, culpa levis means: a. Solutio indebiti
a. Ordinary negligence b. When the third person, without the knowledge of
b. Grave negligence the debtor, pays the debt
c. Slight negligence

Page 6 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

c. Reimbursement due the person who saved property 13. Defense of good father of a family in the selection and
during fire or storm without the knowledge of the supervision of employee is a proper and complete
owner. defense in:
d. All of the above. a. Culpa contractual
b. Culpa aquiliana
6. A juridical relation known as Negotiorum Gestio takes c. Culpa criminal
place. d. Both B and C
a. When a person voluntarily takes charge of another's
abandoned business or property without the 14. The creditor has a right to the fruits of the thing from
owner's consent. the time:
b. When something is received and there is no right to a. The thing is delivered.
demand it and it was delivered through mistake. b. The fruits are delivered.
c. When a person is appointed by a court to take the c. The obligation to deliver the thing arises.
property or business of another. d. The contract is perfected.
d. None of the above.
15. The creditor has a real right to the fruits of the thing:
7. Delay or default on the part of the obligor to do is known a. From the time the obligation to deliver it arises.
as – b. From the time the fruits have been delivered.
a. mora solvendi ex re c. From the time the obligation is demanded.
b. mora accipiendi d. From the perfection of the contract.
c. mora solvendi ex persona
d. compensation morae 16. On February 7, 2020, A is obliged to give B his specific
car. There was no delivery until February 28, 2020 when
8. The wrongful act or tort which causes loss or harm to the garage of the car collapsed due to a typhoon and
another is called: the car was totally destroyed. Is A still liable?
a. Damages a. No, because of the loss of the thing.
b. Damage b. Yes, because the contract was executory at the time
c. Injury of loss.
d. Liability c. No, because there was no delay in the delivery the
car.
9. Which of the following is not a generic obligation? d. Yes, the obligation to deliver the car is changed to
a. obligation to pay P10,000 pay the value thereof plus damages.
b. obligation to deliver Toyota Vios 2020
c. obligation to deliver 50 sacks of corn
d. obligation to give my watch II. DIFFERENT KINDS OF OBLIGATIONS

10. Statement No. 1: An obligation which has for its object 17. The distinction between period and condition is
the delivery of a "delimited generic" object may be lost a. Condition will always happen
by reason of fortuitous vent. b. Period may or may not happen
Statement No. 2: There can be no delay in an obligation c. Period may refer to a past event unknown to the
not to do. parties
a. Both statements are true d. Period is certain to happen unlike condition
b. Both statements are false
c. Statement No. 1 is true while statement NO.2 is 18. Which of the following is an obligation with a period for
false the benefit of both the debtor and the creditor?
d. Statement No. 1 is false while statement No. 2 is a. Payable if you like
true b. Payable when I like
c. Payable on or before January 12, 2021
11. In contracts and quasi-contracts, the liability of the d. Payable on January 12, 2021
debtor who acted in good faith:
a. Extends to all natural and probable consequences of 19. Which of the following obligations is not subject to a
the breach of the obligation, and which the parties period?
have foreseen or could have reasonably foreseen at a. payable “as soon as possible”
the time the obligation was constituted. b. payable "little by little"
b. Extends only to results intended but excluding c. payable whenever "I like it"
exemplary damages. d. payable "when my means permits me to"
c. Extends to all damages which may be reasonably
attributable to the nonperformance of the 20. "I'll give you my car one year after you passed the
obligation. LECPA." The obligation is
d. Extends to all damages which may be renounced in a. valid, because the event is sure to come.
advanced b. valid, the obligation is conditional.
c. valid, but disregard the condition.
12. The officious manager or gestor is liable for any d. void, not legally possible.
fortuitous event in all of the following, EXCEPT:
a. If he has preferred his own interest to that of the 21. Statement No. 1: When the fulfillment of the suspensive
owner. or resolutory condition depends upon the sole will of the
b. If he fails to return the property or business after debtor, the conditional obligation shall be void.
demand by the owner. Statement No. 2: If the original obligation is subject to a
c. If he assumed the management in bad faith. suspensive or resolutory condition and the contract is
d. If he has undertaken risky operations which the novated the new obligation shall be under the same
owner was accustomed to embark upon. conditions unless otherwise stipulated.
a. Both are true

Page 7 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

b. Both are false

c. No. 1 is true; No. 2 is false 28. Which of these is not a conditional obligation?
d. No.1 is false; No. 2 is true a. A is to pay B P100,000 if he finishes his BSA degree
in LCC-M.
22. The debtor shall lose every right to make use of the b. A is to pay B P200,000 15 days after his 60th
period, except: birthday.
a. When he does not furnish a guaranty or security to c. A will pay C B P100,000 15 days after he graduated
the creditor in college.
b. When after the obligation has been constituted, he d. A will pay B P50,000 as soon as his financial means
becomes insolvent, unless he gives a guaranty or will permit him to do so.
security for the debt
c. When the debtor attempts to abscond 29. A and B are the debtors and X and Y are the creditors
d. When the debtor violates any' undertaking in in a solidary obligation to the tune of P40,000. On due
considerations of which the creditor agreed to the date, X renounced in favor of A the entire obligation
period which was validly accepted by A. Which of the following
e. When the creditor does not give the receipt. is true?
a. B shall give P20,000 to A
23. A borrowed from B P100,000 mortgaging in favor of the b. Y can collect from X P20,000
latter his house and lot due November 15, 2020. On July c. Y can still collect from A or B.
15, 2020, the house was hit by a lighting and was d. A can collect P20,000 from B.
destroyed. In this case:
a. B can validly demand payment from A on July 15, 30. An obligation where only the presentation has been
2020 because the latter loses the right to make use agreed upon but the debtor may render another in
of the period upon the impairment of the collateral. substitution is:
b. B can validly demand payment from A on July 15, a. conjoint obligation c. Facultative obligation
2020, unless A gives another collateral equally b. simple obligation d. alternative obligation
satisfactory.
c. B cannot collect on July 15 ,2020 because in the 31. A, B & C solidary debtors to X & Y joint creditors in the
nature of an obligation with a period the debt can amount of P240,000. On due date, how much can Y
only become demandable upon the arrival of the collect from B?
period. a. P240,000 c. P120,000
d. The obligation of A to B is extinguished because of b. P40,000 d. P24,000
the loss of the collateral through a fortuitous event.
32. Proof of pecuniary loss is necessary for the award of:
24. Statement No. 1: In alternative obligations where the a. Liquidated damages
right of choice is exercised by the creditor, consent of b. Exemplary damages
the debtor as to the creditor's choice of which prestation c. Actual damages
to perform is necessary. d. Temperate damages
Statement No. 2: The concurrence of more than one
creditor or more than one debtor in one and the same 33. The creditor is entitled to recover damages and interest
obligation implies solidarity. in addition to the penalty stipulated:
a. Both statements are true. a. When the parties so agreed
b. Both statements are false. b. When the debtor refuses to pay the penalty
c. Statement No, 1 is true while statement No.2 is c. When the debtor is guilty of fraud in the fulfillment
false. of the obligation
d. Statement No. 1 is false while statement No.2 is d. All of the above
true.

25. A and B are solidary debtors of X and Y, solidary III.EXTINGUISHMENT OF OBLIGATIONS

creditors to the amount of P40,000. On the due date
with the consent of Y, X renounced in favor of A the 34. All are secondary modes of extinguishing on obligation,
entire obligation. Which of the following is correct? except one:
a. B shall give A P20,000 a. Compromise
b. Y can still collect from A or B P20,000. b. Illegality
c. Y can collect from X P20,000. c. Impossibility
d. X has no obligation to reimburse Y any amount d. Performance

26. Which obligation is not valid? 35. The following, except one, are requisites of payment as
a. "I promise to give you P10,000 on December 25, a mode of extinguishing an ordinary obligation. Which
2020" is the exception?
b. "I promise to give you P10,000 if my mood a. complete or full payment
dictates". b. payment in due course when the obligation is due
c. "I promise to give you P10,000 if your patient dies". and demandable
d. "I promise to give you P10,000 if you pass the May c. payment using negotiable instrument
2021 CPA Examination." d. payment using legal tender, except if payable in
foreign currency
27. “A will continue giving B the latter’s allowance until B
becomes a CPA”, is an obligation subject to: 36. Which of the following is not a special mode of payment?
a. a resolutory period a. Dacion en pago
b. a suspensive condition b. Payment by Cession
c. a resolutory condition c. Tender of payment
d. a suspensive period

Page 8 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

d. Consignation alone without the need of tender of

payment in cases provided for by law 44. In three of the following cases, facultative
compensation shall prosper? Which is the exception?
37. A owes B two debts. The first debt is secured by a a. gratuitous support
mortgage, the second is not. A tells B that the payment b. civil liability arising from crime
he is making should be applied to the second debt c. mutuum
instead of the first. Which is correct? d. depositum
a. B may refuse such application on the ground that
the first debt is more burdensome to the debtor. 45. Obligation may be modified by:
b. B may refuse such application because the payment a. Changing their object or principal conditions.
shall be applied proportionately b. Substituting the person of the debtor.
c. B cannot refuse the application because of the c. Subrogating a third person in the rights of the
option of the debtor. creditor.
d. B cannot refuse the application because it is to his d. All of the above
benefit.
46. Novation changing the debtor without debtor's
38. One of the following characteristics of dacion en pago is approval:
a characteristic of a contract of sale. Which is it? a. Subrogation
a. There is a pre-existing credit b. Expromision
b. Obligations are extinguished c. Delegacion
c. There is less freedom in fixing the price d. Conventional novation
d. Ownership of the object is transferred to the other
party 47. Legal subrogation is presumed in the following cases,
except:
39. The act of abandoning all his properties in favor of his a. When the creditor pays another creditor who is
creditors so that the latter may cause their sale and preferred
apply the proceeds thereof to their claims b. When a stranger pays the obligation with debtor’s
proportionately is called: consent
a. dacion en pago c. When a guarantor pays the obligation
b. set off d. When the mortgagor pays the mortgagee
c. payment by cession
d. tender of payment with consignation 48. In novation, which of the following is incorrect?
a. If the new obligation is void, original obligation shall
40. In tender and consignation, if after consignation is subsist.
made, the creditor allows the debtor to withdraw the b. In expromision, the insolvency of the new debtor
thing deposited in court, which of the following shall not revive, the action of the creditor against
statements is incorrect? the original debtor
a. Co-debtors, guarantors, and sureties are released c. If the original obligation is subject to a suspensive
from the obligation unless they consented. condition, the new obligation is not subject to the
b. The obligation remains to subsist same condition, unless otherwise stated
c. The obligation is extinguished d. While if the condition is resolutory, the new
d. Obligation is not extinguished obligation is also subject to a resolutory condition,
unless otherwise stated
41. Statement No. 1: Dacion en pago, totally extinguishes
the whole obligation. 49. A and B entered into a contract whereby A was to give
Statement No. 2: In obligation with penal clauses, it is B P1M. Later, they novated the contract by stipulating
necessary for the creditor to show proof of actual that instead of cash A would give a particular car.
damages suffered by him on account of the non- Subsequently the car was destroyed by a fortuitous
performance of the obligation by the debtor. event. Which is correct?
a. Both statements are true a. B has the option to demand either P1M or the value
b. Both statements are false of the car
c. Statement No. 1 is true while statement No. 2 is b. A is liable to pay P1M, the amount of the old
false obligation
d. Statement No. 1 is false while statement No. 2 is c. The original obligation is extinguished but not the
true obligation to deliver the car
d. The original obligation and the obligation to deliver
42. If the obligation is payable in US dollar: the car are both extinguished.
a. the obligation is void.
b. the obligation is valid, but the stipulation is void. 50. Upon the proposal of a third person, a new debtor
c. the creditor can compel the debtor to pay in foreign substituted the original debtor without the latter’s
currency as per agreement. consent. The creditor accepted the substitution. Later,
d. The stipulation and the obligation are void. however, the new debtor became insolvent and
defaulted in his obligation. What is the effect of the new
43. Statement No. 1: Legal compensation takes place by debtor’s default upon the original debtor?
operation of law even if the parties may not be aware a. The original debtor is freed of liability since novation
of it. took place and this relieved him of his obligation.
Statement No. 2: The indivisibility of an obligation b. The original debtor shall pay or perform the
necessarily implies solidarity. obligation with recourse to the new debtor.
a. Both statements are true c. The original debtor remains liable since he gave no
b. Both statements are false consent to the substitution.
c. Statement No.1 is true while statement No.2 is false d. The original debtor shall pay or perform 50% of the
d. Statement No.1 is false while statement No.2 is true obligation to avoid unjust enrichment on his part.

Page 9 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

51. In payment by cession or when the debtor cedes or

assigns his property to his creditor in payment of his 57. Statement No. 1 - In facultative obligations, after
debt, he shall be released from his obligation substitution, if the principal thing is lost due to the
a. To the full extent of the debtor’s obligation debtor’s fault. The debtor is not liable.
b. Only to the extent of the net proceeds of the thing Statement No. 2 - Solidarity can exist although the
assigned creditors and debtors may not be bound in the same
c. Only to the extent allowed by the debtors manner and by the same periods and condition.
d. Only to the extent allowed by the creditors Statement No. 3 – Tradition transfers ownership and
other real rights over the property.
52. A obliged himself to give b a car if B places among the a. All are true.
top ten in the CPA Board Exam. Subsequently, they b. All are false.
agreed that A would give B the car if B merely passes c. I and II are true; III is false
the CPA Board Exam. This is an example of d. I and II are false; III is true
a. Mixed novation e. Correct answer not given
b. Real novation
c. Implied novation 58. D owes C P200,000 but the debt had already prescribed.
d. Personal novation If D, knowing that it has prescribed, nevertheless paid
B he cannot later on get back what he voluntarily paid
53. Berto, an avid fan of Sarah (a famous singer), to C. This is what kind of obligation?
approached the latter and asked Sarah to sing a song a. Natural obligation
for Berto. Sarah promised to sing for Berto on July 24, b. Civil obligation
2015. The date came but Sarah did not comply with her c. Moral obligation
obligation, can Berto compel Sarah to perform her d. Personal obligation
obligation?
a. Yes, there being of the minds between the parties, 59. Which of the following is not an obligation arising from
hence, it is reciprocally demandable. law?
b. Yes, if a person is obliged to do something, the a. Delict
prestation shall be executed by him. b. Quasi-delict
c. Yes, the right of the obligee to have the prestation c. Quasi- contract
executed at the expense of the obligor can be d. Contract
availed of.
d. No, the same shall be undone at the expense of 60. A civil liability which involves the return of the object of
the obligor. the crime whenever possible, plus allowances for any
e. None of the above deterioration or diminution of value as may be
determined by the court to the rightful owner.
54. Statement No. 1 - A real right is a right enforceable a. Reparation
against a particular person. b. Indemnification
Statement No. 2 - In a negative obligation, the debtor c. Restitution
is in delay upon his non-performance of the obligation. d. Imprisonment
Statement No. 3 - Negotiorum gestio arises when a
manager has been tacitly authorized by the owner to 61. D is the driver of a passenger bus which is owned and
take charge of the abandoned property. operated by O. While D is driving said bus, it met an
a. All are true. accident through his negligence where P, a passenger,
b. All are false. was injured. D is liable to P for damages which arise
c. I and II are true; III is false from?
d. I and II are false; III is true a. Law
e. Correct answer not given b. Crime
c. Quasi-contracts
55. Statement No. 1 - When there is a stipulation that the d. Quasi-delict
debtor shall pay after five years, the period is e. Contract
established for the benefit of the debtor.
Statement No. 2 - In payment by cession, the debtor is 62. The creditor has a right to the fruits of the thing from?
released from his obligation to the extent of the net a. The time the thing is delivered
proceeds of the things ceded. b. The time the obligation to deliver the thing arises
Statement No. 3 - In payment by cession, the creditors c. The time the sale is perfected
become the owners of the property. d. The time the fruits are delivered
a. All are true.
b. All are false. 63. Which is demandable at once?
c. I and II are true; III is false a. Conditional obligation
d. I and III are false; II is true b. Obligation with a period
e. Correct answer not given c. Pure obligation
d. Alternative obligation
56. A, B and C owe D, E and F PhP30,000.00. Suppose the
obligation was about to prescribe. F demanded payment 64. The obligation is demandable on the date of the
from A. What is the effect of the demand to the obligation and shall continue to be in force up to the
obligation? arrival of the day certain.
a. it will prejudice all their share in the obligation a. Resolutory period
b. it will prejudice only the share of A b. Indefinite period
c. it will have a retroactive effect and will benefit D, E c. Suspensive period
and F. d. Legal period
d. D, E and F will have a right of recourse against A
e. Correct answer not given

Page 10 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

65. When the thing deteriorates pending the fulfillment of a. Yes, because their liability is joint.
the suspensive condition without the fault of the debtor, b. Yes, because Julia must pay her share being the co-
the impairment is borne by whom? debtor of Rex.
a. To borne by the party who cause the deterioration c. No, because it is Alden who must demand the
b. To be borne partly by the debtor and partly by the P250,000 from Julia.
creditor d. No, because the entire obligation has been
c. To be borne by the debtor condoned by the creditor.
d. To be borne by the creditor
73. The following are requisites of consignation except:
66. The following are the elements of an obligation except: a. There was a debt due and consignation of due
a. Active Subject obligation was made because of some legal cause.
b. Passive Subject b. The previous notice of the consignation had been
c. Object given to the court.
d. Consent c. The amount or thing due was placed at the disposal
of the court.
67. It arises when a person voluntarily takes charge of the d. After the consignation had been made the persons
management of the business or property of another interested were notified thereof.
without any power from the latter.
a. Solutio Indebiti 74. It is a mode of extinguishing obligations that take place
b. Quasi-Delict when two persons, in their own right, are creditors and
c. Negotiorium Gestio debtors of each other.
d. Delict a. Confusion
b. Condonation
68. Gregory, the creditor, seeks to file an action to impugn c. Compensation
or assail the acts done or contracts entered into by d. Counterclaim
Allan, his debtor in fraud of the former. This action is
called: 75. The following are the requisites of novation except:
a. Accion directa a. Invalid old obligation and valid new obligation
b. Accion pauliana b. Intent to extinguish or to modify the old obligation
c. Accion subrogatoria c. Capacity and consent of all the parties to the new
d. Accion accreta obligation
d. Substantial difference of the old and new obligation
69. A” borrowed P2,000 from “B” on January 1, 2022. He
executed a promissory note promising to pay the 76. S1 – In Legal subrogation, consent of all the parties is
indebtedness on June 1, 2022. B demanded A to pay on required.
the said date but to no avail. What kind of delay is S2 – In Conventional subrogation, only notification to
shown in this situation? the debtor is required.
a. Mora solvendi a. All are correct c. Only S1 is incorrect
b. Compensatio morae b. All are incorrect d. Only S2 is incorrect
c. Mora accipiendi
d. None of the above 77. S1 – In dation in payment, insolvency of the debtor is
required.
70. Wilbert entered into a compromise agreement with S2 – In payment by cession, the old and new obligation
Zeinab. Wilbert failed to pay within the period must be valid.
stipulated. Thus, Zeinab filed a motion for execution to a. All are correct c. Only S1 is incorrect
enforce her claim. Wilbert filed a comment and b. All are incorrect d. Only S2 is incorrect
attributed the delays to the Christmas rush. Is the delay
of payment a fortuitous event? 78. S1 – In case of difficulty of performance, the obligation
a. Yes, because Christmas rush is outside the control is extinguished.
of Wilbert. S2 – If the debtor voluntarily prevents the fulfillment of
b. Yes, because Christmas rush is an act of God. the condition, then the obligation is extinguished.
c. No, because there is already a compromise a. All are correct c. Only S1 is incorrect
agreement. b. All are incorrect d. Only S2 is incorrect
d. No, because Wilbert is not free from any
participation in the delay in payment. 79. S1 – The period is established for the benefit of both
parties.
71. Which of the following statements about fortuitous S2 – If the condition depends on the creditor, it is called
event is incorrect? potestative.
a. Cause of breach is independent of the will of the a. All are correct c. Only S1 is incorrect
debtor. b. All are incorrect d. Only S2 is incorrect
b. The event is unforeseeable but avoidable.
c. Occurrence renders it absolutely impossible for the 80. The creditor has the right to the fruits of the thing from
debtor to fulfill his obligation in a normal manner. the time:
d. Debtor is free from any participation in the a. the thing is delivered.
aggravation of the injury to the creditor. b. the obligation to deliver the things arises.
c. the contract is perfected.
72. Rex and Julia owed Alden P500,000 for advancing their d. the fruits are delivered.
equity in a corporation they joined as incorporators. Rex
and Julia bound themselves solidarily liable for the debt. 81. The following are the requisites of legal compensation,
Later, Rex and Julia became sweethearts so Alden except:
condoned the debt of P500,000. May Rex demand from
Julia P250,000 as her share in the debt?

Page 11 of 12 www.teamprtc.com.ph RFBT.3601

EXCEL PROFESSIONAL SERVICES, INC.

a. That each of the obligors is bound principally complied with. Was Ace justified in refusing to accept
and that he be the same time a principal the tobacco leaves?
creditor of the other.
b. That both debts consist in a sum of money, or if a. Yes. Ace was justified in refusing to accept the
the things due are consumable, they be the tobacco leaves. The delivery was to be made
same kind, and also of the same quality if the within a month. Lester's promise of delivery on
latter has been stated. a "best effort" basis made the delivery
c. That the two (2) debts are not yet due. uncertain. The term, therefore, was ambiguous.
d. That they be liquidated and demandable b. No. Ace was not justified in refusing to accept
the tobacco leaves. He consented to the terms
82. Estella bought a car from Gina and delivered a check in and conditions of the sale and must abide by it.
payment of the same. Has Estella paid the obligation? Obligations arising from contract have the force
Why? of law between the contracting parties.
c. Yes. Ace was justified in his refusal to accept
a. No, not yet. The delivery of promissory notes the delivery. The contract contemplates an
payable to order, or bills of exchange or other obligation with a term. Since the delivery was
mercantile documents shall produce the effect made after 30 days, contrary to the terms
of payment only when they have been cashed, agreed upon, Lester could not insist that Ace
or when through the fault of the creditor they accept the tobacco leaves.
have been impaired. d. No. Ace was not justified in refusing to accept
b. Yes, because a check is a valid legal tender of the tobacco leaves. There was no term in the
payment. contract but a mixed condition. The fulfillment
c. It depends. If the check is a manager’s check or of the condition did not depend purely on
cashier’s check it will produce the effect of Lester's will but on other factors, e.g., the
payment. If it’s an ordinary check, no payment. shipping company and the government. Ace
d. Yes, because a check is as good as cash. should comply with his obligation.

83. Bianca, Faye and Zoey bound themselves solidarily to 87. As lending investor, Perry granted a Pl,000,000 loan to
pay Jeff the amount of P5,000.00. Suppose Bianca paid Jonathan to be paid within two years from execution of
the obligation, what is her right as against her co- the contract. As security for the loan, Jonathan
debtors? promised to deliver to Perry his Toyota Innova within
seven (7) days, but Jonathan failed to do so. Perry was
a. Bianca can sue Faye and Zoey for damages. thus compelled to demand payment for the loan before
b. Bianca can sue for rescission. the end of the agreed two-year term. Can Perry compel
c. Bianca can claim a refund from Jeff. Jonathan to pay his loan even before the end of the two-
d. Bianca ask for reimbursement from Faye and year period?
Zoey.
a. Yes, Perry can compel Jonathan to immediately
84. Bianca, Faye and Zoey are solidarily debtors of Jeff. pay the loan. Noncompliance with the promised
Twelve (12) years after the obligation became due and guaranty or security renders the obligation
demandable, Bianca paid Jeff and later on asked for immediately demandable. Jonathan lost his
reimbursement of Faye’s and Zoey’s shares. Is Bianca right to make use of the period.
correct? Why? b. Yes, Perry can compel Jonathan to immediately
pay the loan. The delivery of the Toyota Innova
a. Yes, because the obligation is solidary. is a condition for the loan. Jonathan's failure to
b. No, because the obligation has already deliver the car violated the condition upon
prescribed. which the loan was granted. It is but fair for
c. No, because in solidary obligation any one of the Perry to demand immediate payment.
solidary debtors can pay the entire debt. c. No, Perry cannot compel Jonathan to
d. Yes, because Faye and Zoey will be unduly immediately pay the loan. The delivery of the
enriched at the expense of Bianca. car as security for the loan is an accessory
contract; the principal contract is still the P
85. An obligation ceases to be alternative and becomes a 1,000,000 loan. Thus, Jonathan can still make
simple obligation: use of the period.
a. When the debtor has already made a choice d. No, Perry cannot compel Jonathan to
b. When the creditor has already made a choice immediately pay the loan. Equity dictates that
c. When the choice of the debtor is consented to Perry should have granted a reasonable
by the creditor extension of time for Jonathan to deliver his
d. When the choice of the creditor is consented to Toyota Innova. It would be unfair and
by the debtor burdensome for Isaac to pay the P1,000,000
e. None of the above simply because the promised security was not
delivered.
86. Lester is a tobacco trader and also a lending investor.
He sold tobacco leaves to Ace for delivery within a DISCIPLINE
month, although the period for delivery was not
guaranteed. Despite Lester's efforts to deliver on time,
transportation problems and government red tape “There is light at the end of the tunnel.”
hindered his efforts and he could only deliver after 30
days. Ace refused to accept the late delivery and to pay End of RFBT.3601
on the ground that the agreed term had not been

Page 12 of 12 www.teamprtc.com.ph RFBT.3601

 Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao
Since 1977

RFBT.3601a VILLEGAS/APRADO/MAGUMUN/CELIZ
ANSWERS TO MCQ QUESTIONS May 2024

RFBT. 3601 – OBLIGATIONS

1. C 81. C
21. D 41. B 61. E

2. C 82. A
22. E 42. C 62. B

3. A 83. D
23. B 43. C 63. C

4. A 84. B
24. B 44. C 64. A

5. D 85. E
25. D 45. D 65. D

6. A 86. B
26. B 46. B 66. D

7. C 87. A
27. C 47. D 67. C

8. C
28. D 48. C 68. B

9. D
29. B 49. D 69. A

10. A
30. C 50. A 70. D

11. A
31. C 51. B 71. B

12. D
32. C 52. B 72. D

13. B
33. D 53. E 73. B

14. C
34. D 54. B 74. C

15. B
35. C 55. D 75. A

16. A
36. C 56. B 76. B

17. D
37. C 57. A 77. B

18. D
38. D 58. A 78. B

19. C
39. D 59. D 79.A

20. B
40. C 60. C 80. B

Page 1 of 1 www.teamprtc.com.ph RFBT.3601a

 Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao
Since 1977
RFBT.3602 VILLEGAS/APRADO/MAGUMUN/CELIZ
Contracts (RA 386) May 2024
LECTURE NOTES

Contract 5. Consensuality – contracts are perfected by mere

consent, and from that moment the parties are bound
It is a meeting of minds between two persons whereby one not only to the fulfillment of what has been expressly
binds himself, with respect to the other, to give something, stipulated but also to all the consequences which
or to render some service. (Art. 1305) according to their nature, may be in keeping with good
faith, usage and law (Art. 1315)
Stages in Making a Contract
Essential Requisites of a Contract
1. Conception or Generation – the first stage where the
parties begin their initial negotiation and bargaining for I. Consent
the formation of the contract ending at the moment of II. Object certain or subject matter; and
agreement of the parties; III. Cause or consideration (Art. 1318)
2. Perfection or Birth – the parties had a meeting of minds
as to the object, cause or consideration and other terms Note: In real contracts, the delivery of the object of the
and conditions of the contract; contract is required as a further requisite.
3. Consummation or fulfillment – the last stage which
consists in their performance or fulfillment by the I. Consent
parties of their obligation under the term of the
perfected contract. It is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
Characteristics of a Contract constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
1. Autonomy – it is the freedom of the parties to contract counter-offer. (Art, 1319)
and stipulate provided the stipulations are not contrary
to law, morals, good customs, public order or public Requisites:
policy (Art. 1306)
1. Legal capacity of the contracting parties;
2. Mutuality – the contract must bind both contracting 2. Manifestation of the conformity of the contracting
parties and its validity or compliance cannot be left to parties;
the will of one of them (Art. 1308) 3. Parties’ conformity to the object, cause, terms and
condition of the contract must be intelligent,
However, the termination of the contract does not spontaneous and free from all vices of consent; and
necessarily require mutuality, and it can be validly 4. The conformity must be real.
left to one party by agreement or under a resolutory
facultative condition. Offer

3. Obligatoriness – contracts shall be obligatory in It is defined as an expression of willingness to contract on

whatever form they may have been entered into, certain terms, made with the intention that it shall become
provided all the essential requisites for validity are binding as soon as it is accepted by the person to whom it
present (Art. 1356) is addressed. It must be definite, intentional, and complete.

4. Relativity Rules on advertisements as offers

General Rule: Contracts take effect only between
the parties or their assigns and heirs. 1. Business advertisements – not a definite offer, but
Exceptions: mere invitation to make an offer, unless it appears
a. Rights and obligations that are not otherwise. (Art 1325)
transmissible by their nature, or by the 2. Advertisement for bidders – simply invitation to make
stipulation or by provisions of law (Art 1311) proposals and advertiser is not bound to accept the
b. Stipulation pour autrui (stipulation in favor of a highest or lowest bidder, unless the contrary appears.
third person) – benefits clearly and deliberately (Art. 1326)
conferred by parties to a contract upon third
persons (Art. 1311) and which stipulation is Requisites of Valid Acceptance
merely part of a contract entered into by the
parties, neither of whom acted as agents of 1. Must be absolute; a qualified acceptance constitutes
third person and which favor can be demanded counter-offer (Art. 1319);
by the third person if duly accepted by him 2. No specified form but when the offeror specifies a
before it could be revoked. particular form, such must be complied with.
c. Third persons coming in possession of the
object of contract creating real rights subject to Persons incapacitated to give consent
the provisions of Mortgage Law and the Land 1. Deaf-mutes who do not know how to read and write;
Registration Law (Art. 1312) 2. Insane or demented persons, unless the contract was
d. Contracts entered into in fraud of creditors (Art. entered into during a lucid interval;
1313) 3. Minors (Art. 1327)
e. When a third person induces a party to violate 4. Persons under guardianship
a contract (Art. 1314) 5. Persons suffering from civil interdiction

Page 1 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

6. Objects which are not possible of determination as to

Vices of Consent their kind.

1. Mistake – refers to mistake of facts, not of law, thus III. Cause

rendering the contract voidable, unless mistake of law
involves mutual error as to the legal effect of an It is the essential or more proximate purpose which moves
agreement when the real purpose of the parties is the contracting parties to enter into the contract. It is the
frustrated. (Art. 1334) immediate and direct cause which justifies the creation of
an obligation through the will of the contracting parties.
2. Intimidation – when one of the contracting parties is
compelled by a reasonable and well-grounded fear of an Requisites:
imminent and grave evil upon his person or property of It must:
his spouse, descendants or ascendants, to give his 1. Exist;
consent. (Art. 1335 [2]) 2. Be true; and
3. Be licit.
3. Violence – when in order to wrest consent, serious or
irresistible force is employed. (Art. 1335) Note: Although the cause is not stated in the contract, it is
presumed that it exists and is lawful unless the debtor
However, a threat to one’s claim through competent proves the contrary. (Art 1345)
authority, if the claim is just or legal, does not vitiate
consent. (Art. 1335 [4]) Kinds of Cause

Note: Violence or intimidation shall annul the obligation, 1. Cause of onerous contracts – the prestation or promise
although it may have been employed by a third person of a thing or service by the other.
who did not take part in the contract. (Art. 1336) 2. Cause for remuneratory contracts – the service or
benefit remunerated.
4. Undue Influence – when a person takes improper 3. Cause for gratuitous contracts – the mere liberality of
advantage of his power over the will of another, the donor or benefactor; it does not involve any material
depriving the latter of a reasonable freedom of choice. thing but rather it involves only the generosity of the
(Art. 1337) benefactor.
4. Accessory – identical with cause of principal contract,
5. Fraud – when through the insidious words or from which the accessory derived its life and existence.
machinations of one of the contracting parties, the other
is induced to enter in to a contract which, without them, Formality
he would not have agreed to. (Art 1338)
General Rule: Form is not required in consensual contracts.
Kinds of Fraud to Vitiate Consent
Exceptions: When the law requires a contract to be in
a. Causal fraud (dolo causante) – it is employed writing for its:
by one party prior to or simultaneous with the 1. Validity (formal contracts);
creation or perfection of the contract to secure 2. Enforceability (under Statute of Frauds); or
the consent of the other. 3. For convenience of parties.
b. Incidental fraud (dolo incidente) – it is
committed in the performance of the obligation, Formalities required in specific contracts
and its existence merely results in breach of an
already existing contract, which entitles the 1. Donations
injured party to damages. (Art. 1170) a. Personal property – if the value exceeds
P5,000, the donation and acceptance must be
II. Object both written (Art. 748)

It is the subject matter of the contract. It can be a thing, b. Real property:

right or service arising from a contract. i. Donation must be in a public instrument
specifying therein the property donated
Requisites: and value of charges which done must
1. Determinate or determinable; satisfy;
2. Existing or potentially to exist subsequent to the ii. Acceptance must be written, either in
contract; the same deed of donation or in a
3. Must be licit; separate instrument, but shall not take
4. Within the commerce of man; and effect unless it is done during the
5. Transmissible. lifetime of the donor;
iii. If acceptance is in a separate
General rule: All things or services may be the object of instrument, the donor shall be notified
contracts. thereof in an authentic form, and this
step shall be noted in both instruments.
Exceptions: (Art. 749)
1. Things outside the commerce of men; (Art. 1347)
2. Intransmissible rights; 2. Partnership where real property is contributed
3. Future inheritance, except in cases expressly authorized a. There must be a public instrument regarding
by law; the partnership;
4. Services which are contrary to law, morals, good b. The inventory of the realty must be made,
customs, public order or public policy; signed by the parties, and attached to the public
5. Impossible things or services; and instrument. (Art. 1773)

Page 2 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

1. There is a meeting of the minds of the parties to a

3. Antichresis – the amount of the principal and interest contract;
must be in writing. (Art. 2134) 2. The parties’ true intention is not expressed in the
instrument;
4. Sale or Agency to sell real property or an interest 3. Such failure of the instrument to express the parties’
therein – authority of the agent must be in writing, intention is by reason of mistake, accident, relative
otherwise, the sale shall be void. (Art. 1874) simulation, fraud, or inequitable conduct;
4. The facts upon which relief by way of reformation of the
5. Stipulation to charge interest – interest must be instrument is sought are put in issue by the pleadings;
stipulated in writing (Art. 1956) and
5. There is strong, clear and convincing proof of mistake,
6. Chattel mortgage – personal property must be recorded accident, relative simulation, fraud, or inequitable
in Chattel Mortgage register. (Art. 2140) conduct.

Kinds of Contracts Prescriptive period in reformation of instruments: within 10

years from the date of the execution of the instrument,
A. According to perfection or formation since the suit is based on a written document.
1. Consensual – perfected by meeting of the minds of
the parties (Art. 1305) Interpretation of Contracts
2. Real – requires for their perfection both the consent
of the parties, and the delivery of the object by one If the terms of a contract are clear and leave no doubt upon
party to the other the intention of the contracting parties, the literal meaning
3. Solemn – that which the law requires that they be of its stipulations shall control.
in some particular form (e.g. writing)
If the words appear to be contrary to the evident intention
B. According to the degree of dependence of the parties, the latter shall prevail over the former. (Art.
1. Principal – that which can exist independently of 1370)
other contracts
2. Accessory – that which cannot exist without a valid In order to judge the intention of the contracting parties,
principal contract their contemporaneous and subsequent acts shall be
3. Preparatory – that which is not the end by itself, but principally considered. (Art. 1371)
only a means for the execution of another contract.
However general the terms of a contract may be, they shall
C. According to their form not be understood to comprehend things that are distinct
1. Common or informal – those which require no and cases that are different from those upon which the
particular form parties intended to agree. (Art. 1372)
2. Special or Formal – those which require a
particular form If some stipulation of any contract should admit of several
meanings, it shall be understood as bearing that import
D. According to their nature of the vinculum which they which is most adequate to render it effectual. (Art. 1373)
produce
1. Unilateral – those which give rise to an obligation The various stipulations of a contract shall be interpreted
only to one of the parties together, attributing to the doubtful ones that sense which
2. Bilateral – those which give rise to reciprocal may result from all of them taken jointly. (Art. 1374)
obligations for both parties.
Words which may have different significations shall be
understood in that which is most in keeping with the nature
E. According to the risks involved and object of the contract. (Art. 1375)
1. Commutative – those where each of the parties
acquire an equivalent of his prestation and such The usage or custom of the place shall be borne in mind in
equivalent is pecuniarily appreciable and already the interpretation of the ambiguities of a contract, and shall
determined from the moment of the perfection of fill the omission of stipulations which are ordinarily
the contract. established. (Art. 1376)
2. Aleatory – those which are dependent upon the
happening of an uncertain event, thus, charging the The interpretation of obscure words or stipulations in a
parties with the risk of loss or gain. contract shall not favor the party who caused the obscurity.
(Art. 1377)
F. According to their names of norms regulating them
1. Nominate – those which have their own name and When it is absolutely impossible to settle doubts by the rules
individuality, and are regulated by provisions of law. established in the preceding articles, and the doubts refer
2. Innominate – those which lack name or to incidental circumstances of a gratuitous contract, the
individuality, and are not regulated by special least transmission of rights and interests shall prevail. If the
provisions of law. contract is onerous, the doubt shall be settled in favor of
the greatest reciprocity of interests.
Reformation of Instruments
If the doubts are cast upon the principal object of the
It is a remedy to conform to the real intention of the parties contract in such a way that it cannot be known what may
due to mistake, fraud, inequitable conduct, accident. (Art. have been the intention or will of the parties, the contract
1359) shall be null and void. (Art. 1378)

Requisites: DEFECTIVE CONTRACTS

Page 3 of 11 www.teamprtc.com.ph RFBT.3602

 EXCEL PROFESSIONAL SERVICES, INC.

I. Rescissible Contracts Characteristics:

1. Effective until set aside;
These are contracts validly constituted but nevertheless may 2. Can be ratified;
be set aside due to a particular economic damage or lesion 3. Can be assailed only by the party whose consent was
caused to either of the parties or to a third person. It may be defective or his heirs or assigns;
set aside on whole or in part, up to the extent of the damage 4. May be attacked indirectly or collaterally, by way of
caused. (Art. 1381) defense to an action under the contract by way of a
counterclaim.
Characteristics of Rescissible contract
1. It has all the elements of a valid contract; Classes of voidable contracts:
2. It has a defect consisting of an injury to one of the 1. Those where one of the parties is incapable of giving
contracting parties or to a third person; consent; and
3. It is valid and effective until rescinded; 2. Those where the consent is vitiated by mistake,
4. It can be attached only directly; and violence, intimidation, undue influence or fraud.
5. It is susceptible of convalidation only by (Art. 1390)
prescription.
Note: An action for annulment may be instituted by all who
Contracts that may be rescinded: are thereby obliged principally or subsidiarily. He who has
1. Under Art. 1381, those capacity may not invoke the incapacity of the party with
a. Entered into by guardians whenever the wards whom he has contracted no can those who exerted
whom they represent suffer lesion by more than intimidation, violence or undue influence or employed fraud
¼ of value of the property (Art. 1381 [1]); or caused mistake base their action upon these flaws of the
contract.
If a guardian alienates properties of the
ward without judicial approval, the contract Causes of extinction of an action to annul
is unenforceable for lack of authority (Art. 1. Prescription – the action for annulment must be
1403 par 1); commenced within 4 years depending on the ground
stated.
b. Agreed upon in representation of the absentees, a. Under Art 1381 no.1 – within 4 years from the
if absentee suffers lesion by more than ¼ value time of the termination of the incapacity of the
of the property (Art. 1382 [2]); ward;
b. Under Art. 1381 no. 2 – within 4 years from the
c. Contracts where rescission is based on fraud time the domicile of the absentee is known; or
committed on creditor and cannot collect the c. Under Art. 1381 nos. 3&4 & Art. 1382 - within
claim due (accion pauliana) (Art. 1381 [3]); 4 years from the time of the discovery of fraud.

d. Contracts where the object involved is the 2. Ratification – cleanses the contract of its defects from
subject of litigation; contract entered into by the moment it was constituted. (Art 1396)
defendant without knowledge or approval of
litigants or judicial authority (Art 1381 [4]); a. Express – the desire of the innocent party
to validate the contract is clearly manifested
e. Payment by an insolvent – on debts which are verbally or formally in writing
not yet due; prejudices the claim of others (Art. b. Implied – it is the knowledge of the reason
1382); which renders the contract voidable and
such reason having ceased, the person who
f. Provided for by law (Arts. 1526, 1534, 1538, has a right to invoke it should execute an
1539, 1542, 1556, 1560, 1567 & 1659) act which necessarily implies an intention to
waive his right (Art. 1393)
2. Payments made in state of insolvency (Art. 1382)
a. Plaintiff has no other means to maintain 3. By loss of the thing which is the object of the contract
reparation; through fraud or fault of the person who is entitled to
b. Plaintiff must be able to return whatever he may annul the contract. (Art. 1401)
be obliged to return due to rescission; 4. If the minor is guilty of active misrepresentation of his
c. The things must not have been passed to third age.
persons in good faith;
d. It must be made within 4 years (Art. 1382) III. Unenforceable Contracts

Note: Rescission of contract creates an obligation of mutual Those contracts which cannot be enforced by action or
restitution of the objects of the contract, their fruits, and complaint, unless they have been ratified by the party or
the price with interest. parties who did not give consent thereto.

II. Voidable Contracts An unenforceable contract is valid although it produces no

legal effect.
Are those where consent is vitiated either by the incapacity
of one of the contracting parties or by mistake, violence, Characteristics of Unenforceable Contracts
intimidation, undue influence or fraud. These contracts are 1. It cannot be enforced by a proper action in court;
binding, unless they are annulled by a proper action in 2. It may be ratified;
court. It is susceptible of ratification. (Art. 1390) 3. It cannot be assailed by a third person;
4. May only be assailed as a way of defense, not by direct
Note: Annulment may be had even if there be no damage action; and
to the contracting parties. 5. The defect of unenforceable contract is of a permanent
nature and it will exist as long as the contract is not duly

Page 4 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

ratified. The mere lapse of time cannot give efficacy to Characteristics of Void Contracts
the contract. 1. The contract produces no effect whatsoever either
against or in favor of anyone; hence it does not create,
Kinds of unenforceable contracts modify, or extinguish the juridical relation to which it
1. Those entered into in the name of another person by refers;
one who has been given no authority/legal 2. No action for annulment is necessary, because nullity
representation or acted beyond his powers; exists ipso jure; a judgment of nullity would merely be
declaratory;
Note: A contract of sale over a piece of land entered 3. It cannot be confirmed or ratified; and
into by an agent whose authority is not in writing, 4. If it has been performed, the restoration of what has
even if he acted beyond the scope of his authority been given is in order.
is void, not merely unenforceable. (Art. 1874)
Note: The defect or inexistence of a contract is permanent.
2. Those that do not comply with the Statute if Frauds; It cannot be cured by ratification nor prescription.
and
The following contracts are inexistent and void from the
3. Those where both parties are incapable of giving beginning:
consent to a contract. (Art. 1403) 1. Those whose cause, object or purpose is contrary to
law, morals, good customs, public order or public policy;
2. Those which are absolutely simulated or fictitious;
IV. Void/ Inexistent Contracts 3. Those whose cause or object did not exist at the time of
the transaction;
A void or inexistent contract is one which has no force and 4. Those whose object is outside the commerce of men;
effect from the very beginning, as if it had never been 5. Those which contemplate an impossible service;
entered into, and which cannot be validated either by time 6. Those where the intention of the parties relative to the
or ratification. A void or inexistent contract is equivalent to principal object of the contract cannot be ascertained;
nothing; it is absolutely wanting in civil effects. 7. Those expressly prohibited or declared void by law.

CONTRACT MC QUESTIONS

1. The validity and efficacy of the contract cannot be left to constitute the contract. Which of the following
to the will of one of the contracting parties. constitutes a definite offer?
a. Relativity of contract a. An offer made through an agent
b. Mutuality of contract b. Business advertisement of things for sale
c. Obligatoriness of contract c. Advertisement for bidders
d. Freedom of contract d. All of the above
2. This principle means that contracts take effect only
upon the contracting parties, their assigns or 4. An agreement in restraint of trade.
successors-in-interest a. Perfectly valid
e. Relativity of contract b. Voidable
f. Mutuality of contract c. Unenforceable
g. Obligatoriness of contract d. Void
h. Freedom of contract
5. Contract that is made for a valuable consideration is:
3. Consent is manifested by the meeting of the offer and a. Onerous
the acceptance upon the thing and the cause which are b. Gratuitous
c. Onerous and Gratuitous

Page 5 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

d. Aleatory a. Both are true

b. Both are false
6. The stage of “conception” of a contract is: c. No.1 is true; No. 2 is false
a. When the contract is fully executed d. No.1 is false; No. 2 is true
b. When the parties come to an agreement
c. When negotiations are in progress 16. Which of the following instruments is not subject to
d. When there is a meeting of the parties’ minds. reformation?
a. Simple donations inter vivos wherein no condition
7. These persons are bound by contracts: imposed
a. Contracting parties b. Wills
b. Assigns or Assign c. When the real agreement is void
c. Heirs d. All of the above
d. All of them
17. The following contracts should observe the Statute of
8. Acceptance of an offer made by letter or telegram shall Frauds, except:
bind the offeror: a. Guaranty
a. From the time the offeree has knowledge of the b. Lease of personal property longer than one year
offer. c. Representation as to the credit of a third person
b. From the time the offeree sent his acceptance. d. Lease of personal property for one year
c. From the time the acceptance is communicated.
d. From the time the offeror made the offer. 18. Which of the following contracts is required to be in
writing to be enforceable?
9. Essential requisites of a contract: a. An agreement that by its terms is not to be
a. Consent performed within a year from the making thereof.
b. Cause b. A special promise to answer for the debt, default or
c. Subject miscarriage of another.
d. All of them c. An agreement made in consideration of marriage,
other than a mutual promise to marry.
10. An incidental element of a contract d. All of the above.
a. Implied warranty
b. Payment of interest in a loan 19. Contracts that cannot be sued upon unless ratified:
c. Delivery of the object in contract of pledge a. Voidable
d. All of the above b. Unenforceable
c. Rescissible
11. S1 - A threat to enforce one’s claim through competent d. Void
authority, if the claim is just or legal does not vitiate
consent. 20. Which of the following can be considered as feature of
S2 - Contracts entered into during a lucid interval are the void contract?
valid. Contracts agreed into a state of drunkenness or a. Subject to ratification
during a hypnotic spell are binding. b. They exist
a. Both are true c. Action or defense for nullity is subject to
b. Both are false prescription
c. No.1 is true; No. 2 is false d. It is imprescriptible as a defense
d. No.1 is false; No. 2 is true
21. In three of the following defective contracts, ratification
12. Which of the following contract is not valid? cleanses the defects. Which is the exception?
a. Mutual promise to marry entered into orally a. Both parties are incapable of giving consent
b. Sale of immovable property orally entered into b. Sale of immovable property or interest orally
c. One of the parties in a contract is incapable of giving entered into
consent c. Sale of piece of land thru an agent the authority is
d. Sale of immovable property thru an agent oral
d. Contracts entered into by a person who has been
13. A conferment of a direct benefit in a contract between given no authority
two persons in favor of a third person who must accept
such benefit before the same is withdrawn is known as: 22. Valid until annulled unless there has been ratification
a. Policitacion a. Rescissible contract
b. Stipulation por autrui b. Inexistence contract
c. Donation propter nuptias c. Voidable contract
d. Counter-offer d. None of the above

14. The offeror need not know the acceptance by the offeree 23. Because of the intimidation employed by X, a third
is the theory of: person, S sold his car to B. This contract is:
e. Cognition a. Void
f. Manifestation b. Voidable
g. Expedition c. Unenforceable
h. B or C d. Rescissible

15. Statement No.1: Dolo incidente entitles the person 24. B called C by the telephone to guaranty the debt of D to
against whom it was employed the right to seek the C. The contract between B and C is:
annulment of the contract. a. Unenforceable
Statement No.2: Innominate contracts are exclusively b. Voidable
regulated by the stipulations of the parties. c. Rescissible

Page 6 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

d. Annullable which of five lots he owned Lino undertook to sell to

Ramon. What is the standing of the contract?
25. This kind of defective contract refers to that contract a. Unenforceable.
which is validly agreed upon because all the essential b. Voidable.
elements exits, but courts can nullify it when there is c. Rescissible.
damage or prejudice to one of the parties or to a third d. Void.
person. Its enforcement would cause injustice by reason
of some external facts. 33. One of the following statements concerning ratification
a. Voidable contract of a voidable contract is false. Which is it?
b. Void or Inexistence Contract a. Ratification extinguishes the action to annual
c. Rescissible Contract avoidable contract.
d. Unenforceable Contract b. Ratification cleanses the contract from all its defects
from the moment it was constituted.
26. P, who was in Hongkong, made an overseas call to A, c. Ratification requires the conformity of the party who
his friend, to sell P’s lot in Quezon City immediately as has no right to bring the action for annulment.
P needed cash. Accordingly, A sold the lot to B. The deed d. Ratification may be made by the guardian of the
of sale is in a public document. The sale of P’s lot is: incapacitated person, or the incapacitated person
a. Valid upon attaining capacity, or the party whose consent
b. Rescissible was vitiated.
c. Unenforceable
d. Void 34. The following agreements are covered by the Statute of
Fraud. Which is not?
27. All are incorrect about contracts except one a. An oral agreement which by its terms is not to be
a. Voidable contracts are also called validable performed within one year from the making thereof.
contracts b. An oral special promise to answer for the debt,
b. Stipulation pour autrui is an exception to mutuality default or miscarriage of another.
of contracts c. An oral agreement in consideration of marriage.
c. Fraud in inducement is a ground to nullify a contract d. An oral contract of partnership where the
d. Void contracts are unenforceable but not vice versa contribution in money or personal property amounts
to P3,000 or more.
28. The following, except one, are the characteristics of void
or inexistent contact. What is the exception? 35. S owns an oil painting. Being in need of money, S sold
a. They are not subject to ratification. the painting to B for P1, 000. After the sale it was
b. The right to raise defense of illegality cannot be discovered that the painting was valuable and worth P5,
waived. 000.
c. The defense of illegality of the contract is available a. S may rescind the contract on ground of lesion or
to third persons whose interest is not directly inadequacy of cause
affected. b. S may rescind the contract on ground of fraud
d. The action or defense for declaration of the nullity c. S may annul the contract on the ground of error
or inexistence of the contract does not prescribed. d. B is entitled to the benefit of the contract because
it is valid and binding
29. Mistake in three of the following will not make a contract
voidable. Which one will not? 36. Contract which has no effect at all and cannot be ratified
a. Mistake as to the substance of the thing which is the is a/an:
object of the contract. a. Unenforceable c. Voidable
b. Mistake as to the principal conditions which b. Void contract d. All of them
principally moved one or both parties to enter into
the contract. 37. S sold to B in private instrument his land. Later, B
c. Mistake as to the identity or qualifications of one of wanted to have the sale registered, but registration
the parties, which identity or qualifications have requires a public instrument. In here, B may compel S
been the principal cause of the contract. to execute the needed public instrument.
d. Simple mistake of account.
S sold to B orally his specific land. After B paid S the
30. Statute of Frauds is applicable to price of the sale, he wants to register the land in his
a. Partially executed contract name but he needed a public instrument of sale. In here
b. Oral contract of loan when the amount involved is B may compel S to execute the needed public
less than P500 instrument.
c. Contract not to be performed within a year from the a. Both examples are false c. Only 2 is true
making thereof b. Only 1 is true d. Both are true.
d. All of the above.
38. Ratification of voidable contract is necessary for its
31. When bilateral contracts are vitiated with vices of validity.
consent, they are rendered One can ask for the annulment of a contract based on
a. rescissible. dolo incidente.
b. void. a. Both are true c. I is true, II is false
c. unenforceable. b. Both are false d. I is false, II is true
d. voidable
39. S was forced by X to sign a contract with B for the sale
32. Lino entered into a contract to sell with Ramon, of specific property for P10,000. C a creditor of X is
undertaking to convey to the latter one of the five lots prejudiced by the contract. What can S do?
he owns, without specifying which lot it was, for the a. S may ask for annulment of the contract
price of P1 million. Later, the parties could not agree

Page 7 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

b. S may ask for rescission of the contract c. S1 is true, S2 is false

c. S may ask C to declare the contract avoided d. S1 is false, S2 is true
d. C may ask for the annulment of the contract.
47. S1 – Motive is an essential element of a contract.
40. In the preceding number, what can C do? S2 – Illegal motive makes the contract voidable.
a. C may ask for rescission of the contract a. Both are true
b. C may ask for the reformation b. Both are false
c. C may ask S to declare the contract voided c. S1 is true, S2 is false
d. C may ask for the annulment of the contract. d. S1 is false, S2 is true

41. Which of the following contracts is voidable? 48. Must be in writing to be enforceable:
a. Those where both parties are incapable of giving a. Lease of land for 12 months c. Both of a and b
consent to a contract. b. Lease of car for 18 months d. None of a and b
b. Those undertaken in fraud of creditors when the
latter cannot in any other manner collect the 49. Which of the following is not a characteristic of a
claims due to them. contract?
c. Those where the consent is vitiated by mistake, a. Autonomy c. Mutuality
violence, intimidation, undue influence or fraud b. Relativity d. Effectivity
d. Those whose object is outside the commerce of
men 50. The following are the essential requisites of contracts
except:
42. A stipulation in a contract of lease, which provides that a. Negotiation c. Consent
the tenant shall have the right to continue in possession b. Object d. Cause
of the leased premises so long as he pays monthly
rentals thereon, is a valid stipulation. 51. I. In case of a personal property, if value exceeds
Php5,000, the donation and acceptance must both be
The seller sold to a minor some necessaries in the written.
amount of P600. The goods were delivered to the minor II. In case of a real property, donation must be in a
who, in turn paid the purchase price therefore. The public instrument if value exceeds Php20,000,
contract is unenforceable. specifying therein the property donated and value of
a. Both are true c. No.1 is true; No. 2 is false charges which donee must satisfy.
b. Both are false d. No.1 is false; No. 2 is true a. Both statements are correct.
b. Both statements are incorrect.
43. S and B orally agree that S would sell and B wound buy c. Statement I is correct while statement II is
S’s radio for P400, two years from the date of the incorrect.
agreement. At the end of the two-year period, S refused d. Statement I is incorrect while statement II is
to deliver the radio although B was willing to pay. correct.
a. B can compel S to deliver because B is willing to
pay the price. 52. The following contracts must appear in a public
b. The contract falls under the Statue of Frauds, instrument except:
therefore unenforceable. a. Donation of real properties.
c. No Statue of Frauds because the price is less than b. Donation of personal property below P5,000.
P500. c. Partnership where immovable property or real
d. The object is movable, oral contract is rights are contributed to the common fund.
enforceable. d. None of the above.

44. This kind of defective contract refers to that contract 53. Which of the following is not a restriction on one’s
which is validly agreed upon because all the essential capacity to enter into a contract?
elements exits, but courts can nullify it when there is a. Minority c. Marriage
damage or prejudice to one of the parties or to a third b. Deaf-mute d. Insanity
person. Its enforcement would cause injustice by reason
of some external facts. 54. Which of the following statements is correct?
a. Voidable contract c. Rescissible Contract a. All contracts are perfected by mere consent.
b. All contracts are perfected by delivery of the
b. Void Contract d. Unenforceable Contract
object.
c. All contracts are required to be in writing.
45. S1 – Reformation of the instrument interprets the d. All contracts are required to have a valid
contract in order to express the true intention of the consideration.
parties.
S2 – An onerous contract is interpreted in favor of 55. It is a principle which holds that a contract must bind
greatest reciprocity of interest. both parties; its validity or compliance cannot be left to
a. Both are true the will of one of them.
b. Both are false a. Obligatory force of contracts
c. S1 is true, S2 is false b. Autonomy of contracts
d. S1 is false, S2 is true c. Mutuality of contracts
46. S1 – In case of conflict between a general provision and d. Relativity of contracts
a special provision, the customs of the place shall
prevail. 56. It refers to the rule that a contract is binding not only
S2 – A natural obligation is based on positive and equity between parties but extends to the heirs, successors in
law. interest, and assignees of the parties, provided that the
a. Both are true contract involved transmissible rights by their nature,
b. Both are false or by stipulation or by law.

Page 8 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

a. Obligatory force of contracts 67. Acceptance made by letter or telegram does not bind
b. Autonomy of contracts the offerer except from the time it came to his
c. Mutuality of contracts knowledge
d. Relativity of contracts a. Cognition theory
b. Manifestation theory
57. It is a rule which holds that the freedom of the parties c. Declarative theory
to contract includes the freedom to stipulate, provided d. Creation theory
the stipulations are not contrary to law, morals, good
customs, public order or public policy. 68. In order to commit causal fraud:
a. Obligatory force of contracts a. It must be serious and unilateral
b. Autonomy of contracts b. Serious and bilateral
c. Mutuality of contracts c. Committed by both parties
d. Relativity of contracts d. Committed after the creation of the contract

58. The following are rescissible contracts, except: 69. A contract which is onerous in nature is interpreted:
a. Entered into by guardian whenever ward suffers a. Against both parties
damage more than ¼ of value of property. b. Against the party who made it onerous
b. Agreed upon in representation of absentees, if c. With the least transmission of rights
absentee suffers lesion by more than ¼ of value of d. In favor of greatest reciprocity of interest
property.
c. Contracts where fraud is committed on creditor 70. A contract must bind both parties, its validity cannot be
(accion pauliana). left to one of the parties.
d. Contracts entered into by minors. a. Autonomy of contract
b. Mutuality
59. The following are essential elements of a contract, c. Relativity
except: d. Obligatory force of contract
a. Consent c. Object
b. Delivery d. Cause 71. It is an innominate contract which means “I do that you
may give.”
60. It is manifested by the meeting of the offer and a. Do ut des
acceptance with respect to the thing and cause which is b. Do ut facias
the subject matter of the contract. c. Facio ut des
a. Consent c. Policitation d. Facio ut facias
b. Motive d. Object
72. Contracts take effect only between the parties, their
61. The following are defective contracts, except: heirs and assigns.
a. Voidable c. Natural a. Mutuality
b. Rescissible d. Unenforceable b. Relativity
c. Consensual
62. If both parties are minors, the contract is: d. Obligatory
a. Unenforceable c. Rescissible
b. Voidable d. Void 73. It is the act of making it binding to third persons
a. Delivery
63. In case of payments made in state of insolvency, the b. Registration
contract is: c. Placing it in a public document
a. Unenforceable c. Rescissible d. Placing it in a private document
b. Voidable d. Void
74. It is the stage in the life of a contract wherein the parties
64. If a real property is donated, the contract must appear perform their respective obligations.
in: a. Preparation
a. Writing b. Perfection
b. Public instrument c. Consummation
c. registered d. Delivery
d. Public instrument and registered
75. All of the following are real contracts, except:
65. In the immediately preceding problem, the contract a. Sale
must appear in that form for: b. Pledge
a. Validity c. Deposit
b. Enforceability d. Commodatum
c. Bind the parties
d. Bind third persons 76. If the person is not authorized, the remedy to make it
valid is:
66. The following contracts can be reformed, except: a. Ratification
a. Simple donation inter vivos wherein no condition is b. Annulment
imposed c. Rescission
b. Simple donation mortis causa wherein a condition d. Declaration of absolute nullity
is imposed
c. Wills 77. The following are grounds for ineffective offer, except:
d. When the real agreement is void a. Death
b. Insanity
c. Minority
d. Civil interdiction

Page 9 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

87. S1 – Real contract requires consent and the delivery of

78. If both parties are prohibited to enter into a contract, the thing to create the contract.
the effect is: S2 – Statute of frauds require the contract to appear in
a. Voidable a public instrument.
b. Rescissible a. Both statements are true
c. Unenforceable b. Both statements are false
d. Void c. S1 is true, S2 is false
d. S1 is false, S2 is true
79. It is one giving a person for a consideration a certain
period within which to accept the offer of the oferrer. 88. S1 – In pari delicto doctrine applies if the contract is
a. Option contract unenforceable.
b. Earnest contract S2 – The quantity of object of a contract need not be
c. Perfected contract determinate provided it is capable of coming into
d. Policitation existence.
a. Both statements are true
80. S1 – Business advertisements are definite offers. b. Both statements are false
S2 – A contract entered into during lucid interval is c. S1 is true, S2 is false
voidable. d. S1 is false, S2 is true
a. Both statements are true
b. Both statements are false 89. It is the act of deliberately deceiving others, by feigning
c. S1 is true, S2 is false or pretending by agreement, the appearance of a
d. S1 is false, S2 is true contract which is either non-existent or concealed.
a. Policitation c. Simulation
81. S1 - If both parties are insane, the contract is void. b. Lesion d. Motive
S2 – Stipulation pour autrui is valid even though not
accepted by the third person. 90. The following are classification of cause, except:
a. Both statements are true a. Motive c. Gratuitous
b. Both statements are false b. Onerous d. Remuneratory
c. S1 is true, S2 is false
d. S1 is false, S2 is true 91. It is any damage caused by the fact that the price is
unjust or inadequate.
82. S1 - A contract entered into during hypnotic spell is a. Motive c. Simulation
void. b. Lesion d. Cognition
S2 – If there is mistake, the contract is unenforceable.
a. Both statements are true 92. One the cause of which is the service or benefit which
b. Both statements are false is rewarded.
c. S1 is true, S2 is false a. Onerous c. Remuneratory
d. S1 is false, S2 is true b. Gratuitous d. Natural

83. The following parties are incapacitated to enter into a 93. There shall be no reformation in the following cases,
contract, except: except:
a. Husband and wife selling properties to each other a. When the real agreement is void
b. Minors b. Failure to express true intention of parties
c. Insane c. Wills
d. Demented person d. When the real agreement is void

84. There is _______ when in order to wrest consent, 94. The action to claim for rescission must be commenced
serious or irresistible force is employed. within a period of ___:
a. Violence a. 1 year c. 4 years
b. Intimidation b. 2 years d. Imprescriptible
c. Fraud
d. Undue influence 95. In case of mistake of fraud, the action for annulment
must be commenced –
85. S1 – The usual exaggerations in trade, when the other a. Within 4 years from discovery of the same
party had an opportunity to know the facts, are in b. Within 4 years from the time the defect of consent
themselves fraudulent. ceases
S2 – Incidental fraud only obliges the person employing c. Within four years from the time guardianship
it to pay damages. ceases
a. Both statements are true d. Within 3 years from registration
b. Both statements are false
c. S1 is true, S2 is false 96. The following falls under the Statute of Fraud except:
d. S1 is false, S2 is true a. Agreement that by its term is not to be performed
within a year from the making thereof
86. S1 – Impossible things or services cannot be the object b. A special promise to answer for the default, debt
of a contract. or miscarriage of another
S2 – Contracts are perfected by mere consent and the c. An agreement made in consideration of marriage,
delivery of the thing. other than the mutual promise to marry
a. Both statements are true d. Donation of immovable property
b. Both statements are false
c. S1 is true, S2 is false 97. S1 – Ratification extinguishes the action to annul a
d. S1 is false, S2 is true voidable contract.

Page 10 of 11 www.teamprtc.com.ph RFBT.3602

EXCEL PROFESSIONAL SERVICES, INC.

S2 – Unenforceable contracts cannot be assailed by S2 – In a real contract, delivery is required the time of
third persons the perfection of the contract.
a. Both statements are true a. All are true c. Only S1 is false
b. Both statements are false b. All are false d. Only S2 is false
c. S1 is true, S2 is false
d. S1 is false, S2 is true 107. Which of the following statements is correct?
a. Offers in interrelated contracts are perfected upon
98. S1 – The action or defense for the declaration of the consent.
inexistence of a contract prescribes. b. Offers in interrelated contracts require a single
S2 – Natural obligations grants a right of action to acceptance.
enforce their performance. c. Business advertisements are definite offers that
a. Both statements are true require specific acceptance.
b. Both statements are false d. Advertisements for bidders are only invitations to
c. S1 is true, S2 is false make proposals and the advertiser is not bound to
d. S1 is false, S2 is true accept the highest/lowest bidder, unless it appears
otherwise
99. S1 – Pedro, a senior high student and 16 years old,
married Juana his childhood sweetheart aged 15 years 108. The following are void contracts, except:
old. The marriage is – a. Pactum commissorium
a. Valid d. Unenforceable b. Pactum de non alienando
b. Voidable e. Void c. Pactum leonine
c. Unenforceable d. Pacto de retro

100. Miguel, 16 years old, buys medicine for his ailing 109. Contracts take effect only between the parties or their
mother in a drugstore. The contract is assigns and heirs, except where the rights and obligations
a. Valid arising from the contract are not transmissible by their
b. Voidable nature, by stipulation, or by provision of law. In the latter
c. Unenforceable case, the assigns or the heirs are not bound by the
d. Void contracts. This is known as the principle of
e. Unenforceable a. Relativity of contracts
b. Freedom to stipulate
101. Pedro and Miguel are contending parties in a piece c. Mutuality of contracts
of land. They agreed to settle the matter in court. While d. Obligatory force of contracts
the case was pending, Pedro, without the approval of
the court or of Miguel sold the property to Juan. The 110. A contract where both parties are required to render
status of contract is – reciprocal prestations, are known as:
a. Rescissible d. Void
b. Voidable e. Unenforceable a. Bilateral contract
c. Unenforceable b. Unilateral contract
c. Gratuitous contract
102. Pedro authorized B to sell his watch for P10,000. B d. Commutative contract
sold it for P8,0000. What is the status of the sale?
a. Rescissible d. Void 111. One of the following is not a real contract:
b. Voidable e. Unenforceable
c. Unenforceable a. Pledge
b. Commodatum
103. Pedro authorized B to sell his watch for P10,000. B c. Lease
sold it for P12,0000. What is the status of the sale? d. Mutuum
a. Valid d. Void
b. Voidable e. Unenforceable 112. It is present when one of the contracting parties is
c. Unenforceable compelled by a reasonable and well grounded fear of an
imminent and grave evil upon his person or property or
104. The theory which states that the contract is upon the person or property of his spouse, descendants,
perfected the moment the offeree sends his acceptance and ascendants to obtain consent:
to the offeror.
a. Cognition theory c. Expedition Theory a. Violence
b. Reception theory d. Manifestation Theory b. Physical coercion
c. Intimidation
105. S1 – Simple mistake of account makes the contract
d. Mistake
does not vitiate consent.
e. Fraud
S2 – Incidental fraud obliges the person liable to pay for
damages. FOCUS
S3 – Fraud committed against the creditor makes the “Keep your dreams alive. Understand to achieve anything
contract Rescissible requires faith and belief in yourself, vision, hard work,
a. All are true d. Only S2 is false determination, and dedication. Remember, all things are
b. All are false e. Only S3 is true possible for those who believe.”
c. Only S1 is true End of RFBT.3602
106. S1 – In consensual contract, delivery is required at
the time of consummation.

i
Desiderio P. Jurado, Civil Law Reviewer, 2019

Page 11 of 11 www.teamprtc.com.ph RFBT.3602

 Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao
Since 1977

RFBT.3602a VILLEGAS/APRADO/MAGUMUN/CELIZ
ANSWERS TO MCQ QUESTIONS May 2024

RFBT. 3602 – Contracts

1. B 81. B 101. A
21. C 41. C 61. C

2. A 82. B 102. E
22. C 42. B 62. A

3. A 83. A 103. A
23. B 43. B 63. C

4. D 84. A 104. C
24. A 44. C 64. B

5. A 85. D 105. A
25. C 45. D 65. A

6. C 86. C 106. A
26. D 46. B 66. B

7. D 87. C 107. D
27. A 47. B 67. A

8. A 88. D 108. D
28. C 48. B 68. A

9. D 89. C 109. A
29. D 49. D 69. D

10. B 90. A 110. A

30. C 50. A 70. B

11. A 91. B 111. C

31. D 51. C 71. C

12. D 92. C 112. C

32. D 52. B 72. B

13. B 93. B
33. C 53. C 73. B

14. D 94. C
34. D 54. D 74. C

15. C 95. A
35. D 55. C 75. A

16. D 96. D
36. B 56. D 76. A

17. D 97. A
37. D 57. B 77. C

18. D 98. B
38. D 58. D 78. D

19. B 99. D
39. A 59. B 79. A

20. D 100. A
40. A 60. A 80. B

Page 1 of 1 www.teamprtc.com.ph RFBT.3602a